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Smoking Gun: The IRS's Abuse of Obama's Pro-Israel Enemies

A damning new revelation on the targeting of conservative and Jewish groups.

Barack Obama's Internal Revenue Service is targeting certain Jewish advocacy groups which disagree with Obama's anti-Israel positions on the so-called "disputed territories." In a document entitled "Be On the Lookout" (or BOLO for short), which the IRS disclosed publicly on June 24th, the tax enforcement agency instructed its agents reviewing applications for tax-exempt status to be on the lookout for applications from organizations that “deal with disputed territories in the Middle East” and “may be inflammatory.”

A pattern has emerged with respect to the IRS's special focus on groups that were outspoken in opposing President Obama's demands that Israel freeze its construction of settlements over the pre-June 1967 boundary line between Israel and the West Bank and West and East Jerusalem, known as the “Green Line.”

One of the targeted groups, Z Street, filed a lawsuit against the IRS in August 2010, alleging that the IRS subjected the pro-Zionist group to additional scrutiny in a discriminatory fashion because of its strong pro-Israel ideological views.

Z Street, a nonprofit organization devoted to educating the public about the facts relating to the Middle East, particularly as relate to the existence of Israel as a Jewish state, alleged in its complaint the following:

The case is brought because, through its corporate counsel, Z STREET was informed explicitly by an IRS Agent on July 19, 2010, that approval of Z STREET’s application for tax-exempt status has been at least delayed, and may be denied because of a special IRS policy in place regarding organizations in any way connected with Israel, and further that the applications of many such Israel-related organizations have been assigned to "a special unit in the D.C. office to determine whether the organization's activities contradict the Administration's public policies." These statements by an IRS official that the IRS maintains special policies governing applications for tax-exempt status by organizations which deal with Israel, and which requires particularly intense scrutiny of such applications and an enhanced risk of denial if made by organizations which espouse or support positions inconsistent with the Obama administration’s Israel policies, constitute an explicit admission of the crudest form of viewpoint discrimination, and one which is both totally un-American and flatly unconstitutional under the First Amendment.

The IRS has now released the smoking gun document confirming Z Street's suspicions. It demonstrates that the IRS was not administering its decisions on applications for tax-exempt charitable and educational organization status on a content neutral basis. Moreover, its judgments on what content "may be inflammatory" are inherently subjective.

On its face, there is simply no legal justification for why the IRS would use "disputed territories," a foreign policy issue, to evaluate a group's domestic political activity for purposes of determining eligibility for tax-exempt status. Therefore, without some other compelling content-neutral reason to justify its actions, the IRS's limitation of the issuance of tax-exempt status to a nonprofit educational organization on the basis of the substantive views held by the persons who operate the organization -- views that differ from the Obama administration's foreign policies -- constitutes an unconstitutional restriction on the freedom of speech of such persons.

The IRS has reportedly offered alternative rationales for its position. First, it apparently tried to argue that Z Street could be ineligible for tax-exempt status if it were engaging in lobbying, or if it were what the IRS calls an “action organization,” which is the case when the only way to accomplish the purpose of the organization is through legislation. These rationales do not apply to an organization like Z Street, whose website, public awareness campaigns, and other activities are educational ones conducted in conjunction with informed advocacy of public policy positions. Z Street has stated that it is not engaged in any lobbying activities. Z Street has also stated that none of its purposes can be accomplished through legislative action. Without any evidence to the contrary, the IRS should have ended its heavy-handed probe right there. But it didn't.

The most absurd alternative rationale put forward by the IRS involves its purported concerns about possible funding of terrorism. The IRS claimed, according to an article published on Jewish Press.com, that since Israel is a country where there is a “heightened risk of terrorism,” Z Street required special scrutiny because it might be providing funds to terrorist groups. As the Jewish Press article stated, "of course, Z STREET doesn’t fund anything, and then there is the little matter of Israel being the object of terrorism, not the source of terrorism" (emphasis original).

Moreover, when it comes to Islamist charities, some of which have been directly implicated in the funding of terrorist groups such as Hamas, President Obama himself has taken a very different stance. In his June 2009 speech that he delivered to the Muslim world in Cairo, Obama apologized that his country’s “rules on charitable giving have made it harder for Muslims to fulfill their religious obligation.” Obama then promised to change all that: “I'm committed to work with American Muslims to ensure that they can fulfill zakat [the Islamic duty of charitable contributions].”

Obama made good on his promise. After the Council on American–Islamic Relations (CAIR), an avowedly anti-Israel Islamist advocacy group, had temporarily lost its tax-exempt status because of its failure to file annual tax reports as required by federal law, its representatives visited the White House. Those visits paid off. The IRS sent CAIR's national office a letter in June 2012 reinstating its exemption even though gaps remained in its tax return filings.

According to information contained in an Investor's Business Daily editorial published earlier this month, Obama administration officials "in 2012 met inside the White House with CAIR officials, according to Secret Service visitors logs. In the months leading up to the IRS decision, in fact, the Obama administration held 'hundreds' of closed-door meetings with CAIR — including many in the White House."

Referring to an article in the Daily Caller posted in early June 2012, Investor's Business Daily stated that many of the White House meetings occurred the same month the IRS reversed its decision. In other words, CAIR was given special access to high level Obama administration officials to secure its tax-exempt status although it was not in compliance with basic filing requirements, while Z Street was being given the runaround because of the views it espoused in opposition to Obama's policies towards Israel.

Consider too that CAIR had been named an unindicted co-conspirator in the Holy Land Foundation for Relief and Development terrorist funding case in which the Holy Land Foundation, set up expressly to accept zakat, was convicted in 2008 by a federal jury for giving more than $12 million to Hamas.

Thus, when it came to placating Islamists, President Obama seemed to have forgotten that all those tough rules on charitable giving exist for a good reason – to prevent front groups posing as “charities” from funneling donations to terrorists. Yet, his IRS suddenly remembered the terrorist concerns when it came to applying the rules against groups sticking up for Israel, which is in the crosshairs of the true terrorists.

This record makes a mockery of the soon-to-be National Security Adviser Susan Rice's declaration to reporters, during her farewell news briefing as the United States' United Nations ambassador, that the Obama administration has stood "shoulder to shoulder with Israel on principle."

Making matters even worse, Rice's nominated successor at the UN, Samantha Power, will be anything but standing "shoulder to shoulder with Israel." More likely, she will be giving the cold shoulder to Israel if she becomes the next UN ambassador, since she believes that America's foreign policy decision-makers have too often deferred "reflexively to Israeli security assessments." One way for the Obama administration to address what she considered a "longstanding foreign policy flaw" - "the degree to which special interests dictate the way in which the 'national interest' as a whole is defined and pursued" - is for Obama's IRS to go after those "special interests."

President Obama's IRS has unconstitutionally sought to use its discretion in granting tax-exempt status, which affects the ability of donors to make tax-deductible contributions, in order to punish groups which do not hew to the Obama administration's foreign policy position on the Israeli-Palestinian conflict. This gross abuse of power must be stopped, and the persons responsible must be held fully accountable for their actions.